Nearly two-thirds of contractors told the site in a March survey
they accept plastic now, and just about one-fifth said they
actually prefer it over a thick wad of cash or a check.

But what's best for the consumer?

Credit cards are the best way to go, Angie says, and there's a
simple reason: You're far better protected against
contractor fraud or botched projects by a credit card
company–especially if your card comes with a zero-liability policy.

There's also a bit of a lag for credit card processing, which
gives you a little extra legroom if a job goes bad and you need
to cancel a payment.

"Many highly qualified and reliable companies still aren't
equipped for credit card payment, though, and unless consumers
insist on credit card payments, this shouldn't be a large factor
in determining who to hire," Hicks says. "But payment options and
payment terms are an important discussion point in the hiring
process, so be prepared to talk about how you will pay well
before you decide."

Here's what you can do to protect yourself, no matter how you
pay:

Stagger your payments. Even the simplest home
improvement project could take weeks or months to complete.
Stagger your payments based on the workers' progress rather than
forking over a lump sum at the beginning. In fact, that's one
sign you're dealing with a shady business. You shouldn't
pay more than 10 percent of the estimated contract price
upfront, according to the Contractors State License Board.

Ask about fees. Pay by credit when you can, but
keep in mind some contractors will charge a "processing fee" for
the convenience.

Debit and credit are not created equally. Many
consumers think debit cards are interchangeable with credit
cards, but liability issues make all the difference. Some banks
don't offer the same protection for debit transactions as they
would for credit purchases. It's like writing a check–once the
cash is gone, it's gone.

Checks rein supreme. The vast majority of
consumers dole out checks for contract work, and keeping the
paper trail alive is crucial. Fill out the memo field with
exactly what you're paying for and keep a copy for your own
records.

DON'T pay in cash. "With cash, you have no paper
trail should something go wrong, and if a contractor is insisting
on cash, that's a red flag," Hicks warns. That hasn't kept
consumers from hitting the ATM anyway: Nearly 40 percent of
respondents in an Angie's poll said they paid in cash, and even
more troubling were the 12 percent who said they paid upfront.